Senate Dems Want to Restrain Fed

Senate Democrats circulated a plan on Tuesday to drastically curb the Federal Reserve. The proposal is part of Senate Banking Committee Chairman Christopher Dodd's broader proposal to overhaul the regulation of financial markets, which would create a single banking regulator, a council of regulators to monitor systemic risks to the economy, and a Consumer Financial Protection Agency. Under the plan circulated Tuesday, the Fed would focus narrowly on monetary policy, i.e. the setting of interest rates, and would for the most part, bow out of regulation, no longer offering emergency loans to individual companies, supervising banks, or working toward consumer protection. Economists participating in The Wall Street Journal's forecasting survey overwhelmingly said that the U.S. shouldn't separate financial regulation from the central bank. Dodd's bill would also give the president the power to name and the Senate the power to confirm the chairman of each of the Fed's 12 regional banks. Private bankers currently choose six of the nine directors on each of the boards.